Limestone Bancorp, Inc. (NASDAQ:LMST) (the "Company"), parent company of Limestone Bank, Inc. (the "Bank"), today reported unaudited results for the first quarter of 2023. Please see attached financial results and data tables for more information.

About Limestone Bancorp, Inc.

Limestone Bancorp, Inc. (NASDAQ:LMST) is a Louisville, Kentucky-based bank holding company which operates banking centers in 14 counties through its wholly-owned subsidiary Limestone Bank. The Bank's markets include metropolitan Louisville in Jefferson County and the surrounding counties of Bullitt and Henry and extend south along the Interstate 65 corridor. The Bank serves south central, southern, and western Kentucky from banking centers in Barren, Butler, Daviess, Edmonson, Green, Hardin, Hart, Ohio, and Warren counties. The Bank also has banking centers in Lexington, Kentucky, the second largest city in the state, and Frankfort, Kentucky, the state capital. Limestone Bank is a traditional community bank with a wide range of personal and business banking products and services.

Forward-Looking Statements

Statements in this press release relating to Limestone Bancorp's plans, objectives, expectations or future performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "may," "should," "anticipate," "estimate," "expect," "intend," "objective," "possible," "seek," "plan," "strive" or similar words, or negatives of these words, identify forward-looking statements that involve risks and uncertainties. Although the Company's management believes the assumptions underlying the forward-looking statements contained herein are reasonable, any of these assumptions could be inaccurate. Therefore, there can be no assurance the forward-looking statements included herein will prove to be accurate. Factors that could cause actual results to differ from those discussed in forward-looking statements include, but are not limited to: the Company's pending merger transaction with Peoples Bancorp, Inc., merger-related expenses and requirements during the pendency of the merger transaction and conditions that must be satisfied for the merger transaction to be completed, including the receipt of required regulatory and shareholder approvals (all of which has been obtained); the impact and duration of the COVID-19 pandemic; economic conditions both generally and more specifically in the markets in which the Company and its subsidiaries operate; competition for the Company's customers from other providers of financial services; government legislation and regulation, which change from time to time and over which the Company has no control; changes in inflation and efforts to control it; changes in interest rates; material unforeseen changes in liquidity, results of operations, or financial condition of the Company's customers; and other risks detailed in the Company's filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company. See Risk Factors outlined in the Company's Form 10-K for the year ended December 31, 2022.

The Company's Annual Report on Form 10-K, which also constitutes the 2022 annual report to shareholders, is accessible at no cost on the Company's website at www.limestonebank.com, under the Investor Relations section. Shareholders of the Company may receive a hard copy free of charge upon request to the Company at 2500 Eastpoint Parkway, Louisville, Kentucky 40223-4156, Attention: Investor Relations; (502) 499-4773.

Additional Information

Unaudited supplemental financial information for the first quarter ending March 31, 2023, follows.

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)

	Three			Three			Three			Three			Three
	Months			Months			Months			Months			Months
	Ended			Ended			Ended			Ended			Ended
	3/31/23			12/31/22			9/30/22			6/30/22			3/31/22

Income Statement Data
Interest income	$	17,704		$	17,140		$	15,121		$	13,122		$	12,427
Interest expense		5,365			3,768			2,209			1,442			1,313
Net interest income		12,339			13,372			12,912			11,680			11,114
Provision (negative provision) for credit losses		654			130			(1,250	)		450			750
Net interest income after provision		11,685			13,242			14,162			11,230			10,364

Service charges on deposit accounts		653			703			748			690			634
Bank card interchange fees		1,006			1,127			1,061			1,087			1,003
Bank owned life insurance income		147			107			148			249			202
Gain (loss) on sales and calls of securities, net		—			—			—			(3	)		—
Gain on sale of premises held for sale		—			—			—			—			163
Other		254			218			271			233			236
Non-interest income		2,060			2,155			2,228			2,256			2,238

Salaries & employee benefits		4,493			4,847			4,959			4,651			4,564
Occupancy and equipment		1,036			983			1,134			1,055			1,029
Deposit account related expense		561			557			571			574			547
Data processing expense		425			400			402			403			386
Professional fees		226			155			206			236			221
Marketing expense		94			141			159			172			133
FDIC insurance		90			90			90			90			90
Deposit tax		105			99			99			99			99
Communications expense		102			126			108			121			64
Insurance expense		112			102			104			109			105
Postage and delivery		152			153			156			150			163
Merger expenses		417			691			—			—			—
Other		490			518			709			567			570
Non-interest expense		8,303			8,862			8,697			8,227			7,971

Income before income taxes¹		5,442			6,535			7,693			5,259			4,631
Income tax expense		1,259			1,621			1,880			1,223			1,052
Net income	$	4,183		$	4,914		$	5,813		$	4,036		$	3,579

Weighted average shares – Basic		7,632,028			7,638,855			7,639,492			7,631,883			7,614,382
Weighted average shares – Diluted		7,632,028			7,638,855			7,639,492			7,631,883			7,614,382

Basic earnings per common share	$	0.55		$	0.64		$	0.76		$	0.53		$	0.47
Diluted earnings per common share	$	0.55		$	0.64		$	0.76		$	0.53		$	0.47
Cash dividends declared per common share	$	0.05		$	0.05		$	0.05		$	0.05		$	0.05

Performance Ratios
Return on average assets		1.15	%		1.33	%		1.59	%		1.14	%		1.03	%
Return on average equity		12.45			15.05			17.83			12.66			11.07
Yield on average earning assets (tax equivalent)		5.13			4.89			4.37			3.95			3.82
Cost of interest-bearing liabilities		2.05			1.44			0.85			0.58			0.53
Net interest margin (tax equivalent)		3.58			3.82			3.73			3.51			3.42
Efficiency ratio²		54.77			52.62			57.44			59.02			59.70
Non-interest expense to average assets		2.29			2.41			2.38			2.33			2.30

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)

	As of
	3/31/23			12/31/22			9/30/22			6/30/22			3/31/22

Assets
Loans	$	1,139,208		$	1,111,854		$	1,127,945		$	1,073,815		$	1,047,285
Allowance for credit losses³		(14,391	)		(13,030	)		(13,031	)		(12,550	)		(12,195	)
Net loans		1,124,817			1,098,824			1,114,914			1,061,265			1,035,090
Securities held to maturity^{3, 4}		43,185			43,282			43,350			44,205			45,639
Securities available for sale⁴		186,978			180,173			181,292			193,022			204,071
Federal funds sold & interest-bearing deposits		40,378			37,476			50,940			18,244			22,040
Cash and due from financial institutions		7,121			7,159			6,430			7,742			10,009
Premises and equipment		21,749			22,103			22,503			22,747			23,043
Bank owned life insurance		31,273			31,132			31,032			30,888			30,643
FHLB Stock		5,626			5,176			5,176			5,116			5,116
Deferred taxes, net		19,689			21,283			23,002			23,343			22,648
Goodwill		6,252			6,252			6,252			6,252			6,252
Intangible assets		1,669			1,733			1,797			1,861			1,925
Accrued interest receivable and other assets		7,694			7,862			7,007			6,383			6,230
Total Assets	$	1,496,431		$	1,462,455		$	1,493,695		$	1,421,068		$	1,412,706

Liabilities and Equity
Certificates of deposit⁵	$	344,697		$	290,161		$	273,780		$	256,141		$	260,064
Interest checking		291,661			314,082			286,867			269,240			274,054
Money market		161,021			179,035			215,450			209,183			216,845
Savings		163,357			148,552			154,545			163,573			166,135
Total interest-bearing deposits		960,736			931,830			930,642			898,137			917,098
Demand deposits		261,582			268,954			287,938			269,425			281,533
Total deposits		1,222,318			1,200,784			1,218,580			1,167,562			1,198,631
FHLB advances		80,000			70,000			90,000			70,000			30,000
Junior subordinated debentures		21,000			21,000			21,000			21,000			21,000
Subordinated capital note		25,000			25,000			25,000			25,000			25,000
Accrued interest payable and other liabilities		9,722			11,813			10,744			10,888			9,855
Total liabilities		1,358,040			1,328,597			1,365,324			1,294,450			1,284,486

Common stock		140,639			140,639			140,639			140,639			140,639
Additional paid-in capital		26,210			26,312			26,101			25,889			25,733
Retained deficit		(11,793	)		(14,954	)		(19,486	)		(24,917	)		(28,571	)
Accumulated other comprehensive loss		(16,665	)		(18,139	)		(18,883	)		(14,993	)		(9,581	)
Total stockholders' equity		138,391			133,858			128,371			126,618			128,220
Total Liabilities and Stockholders' Equity	$	1,496,431		$	1,462,455		$	1,493,695		$	1,421,068		$	1,412,706

Ending shares outstanding		7,629,402			7,638,633			7,639,033			7,640,680			7,622,157
Book value per common share	$	18.14		$	17.52		$	16.80		$	16.57		$	16.82
Tangible book value per common share⁶		17.10			16.48			15.75			15.51			15.75

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)

	As of
	3/31/23			12/31/22			9/30/22			6/30/22			3/31/22
Average Balance Sheet Data
Assets	$	1,470,834		$	1,461,199		$	1,451,647		$	1,417,087		$	1,407,030
Loans		1,120,482			1,110,078			1,096,478			1,053,057			1,028,546
Earning assets		1,404,469			1,395,860			1,378,771			1,339,555			1,326,234
Deposits		1,186,981			1,204,804			1,203,098			1,184,426			1,199,174
Long-term debt and advances		136,389			114,586			108,229			93,968			67,667
Interest bearing liabilities		1,062,281			1,037,991			1,029,131			1,000,367			996,710
Stockholders' equity		136,242			129,560			129,346			127,827			131,097

Asset Quality Data
Nonaccrual loans	$	879		$	856		$	1,054		$	3,007		$	3,447
Troubled debt restructurings on accrual		—			133			146			150			333
Loan 90 days or more past due still on accrual		—			—			—			—			—
Total non-performing loans		879			989			1,200			3,157			3,780
Real estate acquired through foreclosures		—			—			—			—			—
Other repossessed assets		—			—			—			—			—
Total non-performing assets	$	879		$	989		$	1,200		$	3,157		$	3,780

Non-performing loans to total loans		0.08	%		0.09	%		0.11	%		0.29	%		0.36	%
Non-performing assets to total assets		0.06			0.07			0.08			0.22			0.27
Allowance for credit losses to non-performing loans		1,637.20			1,317.49			1,085.92			397.53			322.62

Allowance for credit losses to total loans³		1.26	%		1.17	%		1.16	%		1.17	%		1.16	%

Loan Charge-off Data
Loans charged off	$	(130	)	$	(158	)	$	(86	)	$	(367	)	$	(227	)
Recoveries		237			27			1,817			272			141
Net (charge-offs) recoveries	$	107		$	(131	)	$	1,731		$	(95	)	$	(86	)

Loans by Risk Category⁷
Pass	$	1,113,804		$	1,089,330		$	1,116,009		$	1,052,624		$	1,023,039
Watch		17,450			15,189			3,177			6,426			8,567
Special Mention		—			—			—			—			—
Substandard		7,954			7,335			8,759			14,765			15,679
Doubtful		—			—			—			—			—
Total	$	1,139,208		$	1,111,854		$	1,127,945		$	1,073,815		$	1,047,285

Loans by Past Due Status
Past due loans:
30 – 59 days	$	2,015		$	1,919		$	300		$	600		$	1,108
60 – 89 days		207			268			57			209			89
90 days or more		—			—			—			—			—
Nonaccrual loans		879			856			1,054			3,007			3,447
Total past due and nonaccrual loans	$	3,101		$	3,043		$	1,411		$	3,816		$	4,644

LIMESTONE BANCORP, INC. Unaudited Financial Information (in thousands, except share and per share data)

	As of
	3/31/23		12/31/22		9/30/22		6/30/22		3/31/22
Risk-based Capital Ratios - Company
Tier I leverage ratio	10.72	%	10.44	%	10.04	%	9.68	%	9.38	%
Common equity Tier I risk-based capital ratio	10.23		10.14		9.46		9.16		8.93
Tier I risk-based capital ratio	11.81		11.71		10.89		10.49		10.19
Total risk-based capital ratio	14.76		14.63		13.75		13.39		13.12

Risk-based Capital Ratios – Limestone Bank
Tier I leverage ratio	11.80	%	11.59	%	11.56	%	11.39	%	11.20	%
Common equity Tier I risk-based capital ratio	13.00		13.01		12.55		12.38		12.21
Tier I risk-based capital ratio	13.00		13.01		12.55		12.38		12.21
Total risk-based capital ratio	14.08		14.01		13.53		13.35		13.17

FTE employees, end of period	208		222		226		225		222

Footnotes:

⁽¹⁾ Pretax, pre-provision income (PTPI) is a non-GAAP financial measure calculated by adjusting pretax income or income before income taxes to add back provision for credit losses. Management believes that PTPI is a useful financial measure as it enables the assessment of the Company's ability to generate earnings to cover credit losses through a credit cycle and provides an additional basis for comparing results of operations between periods by isolating the impact of provision for credit losses, which can vary significantly between periods.


	Three Months Ended
	3/31/23		12/31/22		9/30/22			6/30/22		3/31/22
Pretax, Pre-Provision Income	(in thousands)

Income before income taxes	$	5,442	$	6,535	$	7,693		$	5,259	$	4,631
Provision for credit losses		654		130		(1,250	)		450		750
Pretax, pre-provision income		6,096		6,665		6,443			5,709		5,381

⁽²⁾ The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and fee income. The efficiency ratio is calculated by dividing total non-interest expenses as determined under GAAP by net interest income and total non-interest income, but excluding from the calculation net gains on the sale of securities and expenses disclosed from time to time as non-recurring in nature. Management believes this provides a reasonable measure of primary banking expenses relative to primary banking revenue.


	Three Months Ended
	3/31/23			12/31/22			9/30/22			6/30/22			3/31/22
Efficiency Ratio	(in thousands)

Net interest income	$	12,339		$	13,372		$	12,912		$	11,680		$	11,114
Non-interest income		2,060			2,155			2,228			2,256			2,238
Less: Net gain (loss) on securities		—			—			—			(3	)		—
Revenue used for efficiency ratio		14,399			15,527			15,140			13,939			13,352
Non-interest expense		8,303			8,862			8,697			8,227			7,971
Less: Merger expenses		417			691			—			—			—
Expenses used for efficiency ratio		7,886			8,171			8,697			8,227			7,971

Efficiency ratio		54.77	%		52.62	%		57.44	%		59.02	%		59.70	%

⁽³⁾ Effective January 1, 2023, the Company began accounting for credit losses under ASC 326, Financial Instruments – Credit Losses (CECL). Adoption resulted in the establishment of an allowance for credit losses for held to maturity securities of $30,000, an increase in allowance for credit losses for loans of $586,000, an increase of the allowance for credit losses related to unfunded commitments of $24,000, which is recorded in other liabilities, and a reduction in retained earnings of $480,000, net of tax.

⁽⁴⁾ Investment Securities – The following table sets forth the amortized cost and fair value of the securities portfolio at the dates indicated.

	March 31, 2023											December 31, 2022
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(dollars in thousands)
Securities available for sale
U.S. Government and federal agencies	$	30,987	$	—	$	—	$	(2,324	)	$	28,663	$	24,541	$	—	$	(2,784	)	$	21,757
Agency mortgage-backed residential		78,620		—		51		(9,397	)		69,274		80,283		9		(10,387	)		69,905
Collateralized loan obligations		48,192		—		—		(2,094	)		46,098		48,202		—		(2,161	)		46,041
Corporate bonds		45,526		—		116		(2,699	)		42,943		45,512		—		(3,042	)		42,470
Total available for sale	$	203,325	$	—	$	167	$	(16,514	)	$	186,978	$	198,538	$	9	$	(18,374	)	$	180,173

	Amortized Cost		Allowance for Credit Losses			Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value		Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
	(dollars in thousands)
Securities held to maturity
State and municipal	$	43,215	$	(30	)	$	1	$	(7,637	)	$	35,549	$	43,282	$	—	$	(8,386	)	$	34,896
Total held to maturity	$	43,215	$	(30	)	$	1	$	(7,637	)	$	35,549	$	43,282	$	—	$	(8,386	)	$	34,896

⁽⁵⁾ The following table denotes contractual time deposit maturities and average rates as of March 31, 2023:

	Non-Brokered Time Deposits				Brokered Time Deposits
Maturity Quarter	As of March 31, 2023 (in thousands)		Weighted Average Rate		As of March 31, 2023 (in thousands)		Weighted Average Rate

Q2-2023		50,586	1.62	%		95,251	4.29	%
Q3-2023		43,303	1.70			45,933	5.09
Q4-2023		40,825	2.32			—	0.00
Q1-2024		21,062	0.67		—		0.00
Thereafter		47,737	0.72			—	0.00
Total time deposits	$	203,513	1.44	%	$	141,184	4.55	%

⁽⁶⁾ Tangible book value per common share is a non-GAAP financial measure derived from GAAP based amounts. Tangible book value per common share is calculated by excluding the balance of goodwill and other intangible assets from common stockholders' equity. Tangible book value per common share is calculated by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which is calculated by dividing common stockholders' equity by common shares outstanding. Management believes this is consistent with bank regulatory agency treatment, which excludes goodwill and other intangible assets from the calculation of risk-based capital.

	As of
	3/31/23		12/31/22		9/30/22		6/30/22		3/31/22
Tangible Book Value Per Share	(in thousands, except share and per share data)

Common stockholders' equity	$	138,391	$	133,858	$	128,371	$	126,618	$	128,220
Less: Goodwill		6,252		6,252		6,252		6,252		6,252
Less: Intangible assets		1,669		1,733		1,797		1,861		1,925
Tangible common equity		130,470		125,873		120,322		118,505		120,043

Shares outstanding		7,629,402		7,638,633		7,639,033		7,640,680		7,622,157
Tangible book value per common share	$	17.10	$	16.48	$	15.75	$	15.51	$	15.75
Book value per common share		18.14		17.52		16.80		16.57		16.82

⁽⁷⁾ Loans by Risk Category reflect management's risk ratings based on categories aligned with the bank regulatory definitions.

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